Shanghai's key stock index rose slightly in the morning session thanks to a rally among car makers over a report that China's passenger car sales accelerated 20.4 percent last year.

 

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, added 0.11 percent, or 5.96 points, to 5,441.77 at 11:30am today.

 

Gainers in the Shanghai market outnumbered losers 530 to 245 and 74 were unchanged.

 

The Shenzhen Composite Index, which covers the smaller mainland stock market, was up 1.78 percent, or 27.48 points, to 1,567.11.

 

Changchun-based FAW Car Co led the gains among car makers as it climbed the daily cap of 10 percent, or 2.06 yuan (28 US cents), to finish the morning session at 22.68 yuan.

 

SAIC Motor Co, China's largest car maker, also gained 3.91 percent, or 1.07 yuan, to 28.47 yuan. The Shanghai-based auto maker said sales rose 26 percent last year to 1.69 million vehicles. Passenger car sales rose 24 percent to 1.14 million in 2007 from the previous year, it said.

 

China's passenger car sales accelerated 20.4 percent to 5.99 million units last year, according to the China Passenger Car Association, but an industry expert cautioned that sales growth may slow.

 

The brisk sales included 4.45 million cars, a growth of 20.4 percent year on year, 216,594 multi-purpose vehicles as well as 989,480 mini vans, the semi-official auto association said yesterday.

 

Steel makers gained this morning on higher prices of the alloy.

 

Baoshan Steel, China's biggest steel maker, rose 3.92 percent, or 0.74 yuan, to 19.61 yuan. Wuhan Iron & Steel Co, China's fifth-largest steel maker by output, gained 5.42 percent, or 1.17 yuan, to 22.75 yuan. Maanshan Iron & Steel Co, one of China's biggest producers of construction steel, advanced 3.36 percent, or 0.37 yuan, to 11.38 yuan.

 

Prices of hot-rolled coil, an industry benchmark, rose two percent over the past three weeks to 4,895 yuan a metric ton in China yesterday, according to Beijing Antaike Information Development Co.

 

But oil and energy shares dropped in the early session after the government vowed to freeze price increases of oil products, natural gas and electricity in the "near future," Premier Wen Jiabao said yesterday as the country tries to curb inflation, now running at an 11-year high.

 

Sinopec, Asia's biggest oil refiner, retreated 2.99 percent, or 0.73 yuan, to 23.65 yuan. PetroChina Co, the nation's biggest oil company, slipped 0.71 percent, or 0.22 yuan, to 30.60 yuan.

 

China Yangtze Power Co, owner of the world's biggest hydropower project, fell 2.92 percent, or 0.59 yuan, to 19.60 yuan. Huaneng Power International Inc, the listed unit of China's largest power group, lost 3.18 percent, or 0.49 yuan, to 14.90 yuan.

 

The government will also cap costs of daily goods when necessary, stop increases of fees for public transport and school tuition and step up a crackdown on price manipulation, Wen said at a State Council meeting.

 

Inflation in China surged to 6.9 percent in November, the fastest since 1996. It was named by policy makers as one of the two major economic risks, along with overheating, for 2008.

 

(Shanghai Daily January 10, 2008)